Panama Inflation December 2015

Panama: Inflation edges up in December

January 12, 2016

In December, consumer prices fell 0.1%, which came in below November’s flat reading. According to the National Comptroller’s Office (Contraloría General de la República), prices for of the 12 categories included in the survey had fallen. The biggest declines were seen in the transportation and the clothing and footwear components. These drops, however, were offset by gains in five components of the survey.

Inflation inched up the flat reading recorded in November to 0.2% in December. Inflation has reached historically-low levels thanks to a price control system and falling oil prices. In December, the government extended the price control system for an additional six months. Due to the country’s dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to influence inflation.

Panelists participating in the LatinFocus Consensus Forecast expect inflation to reach 0.8% by the end of 2016, which is down 0.3 percentage points from last month’s forecast. For 2017, the panel sees inflation at 1.5%.

According to data released by the National Comptroller’s Office (Contraloría General de la República) on 15 December, in year-on-year terms the economy grew 5.4% in Q3, a slight improvement from Q2’s 5.2% growth, and the second-best performance since the beginning of 2016.